Cooling inflation numbers boost Trump’s economic message

Consumer prices rose at a lower-than-expected rate last month, handing President Trump an early Christmas gift and a much-needed political boost heading into the midterm campaign season.

The Department of Labor on Thursday said the Consumer Price Index, a key inflation measure, rose 2.7% for the 12 months leading to November, beating Wall Street estimates of 3.1%.

The CPI report had major gaps because of the recent government shutdown, and inflation remains above the Federal Reserve’s target rate of 2%.

Still, the positive trajectory gave Mr. Trump a told-you-so moment after his Wednesday night address promising economic relief.

“What great timing, practically no inflation,” Mr. Trump said in the Oval Office.

Mr. Trump and his lieutenants are hitting the road and the airwaves to patch dwindling favorability ratings on the economy and promote their agenda of tax cuts, deregulation and tariffs.

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SEE ALSO: Inflation report comes in cooler than expected, at 2.7% annual rate

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They hope to gain the upper hand on pocketbook issues before the Democrats’ narrative about affordability, which was successful in recent elections, takes root and threatens Republican majorities.

“Today’s economic report is a message of Christmas cheer for the American people who struggled over the last four years through Biden’s cost-of-living crisis and the highest inflation in nearly half a century,” said House Budget Committee Chairman Jodey Arrington, Texas Republican.

Inflation rose 0.2% on a seasonally adjusted basis over the two months from September to November, the Bureau of Labor Statistics said.

White House officials attributed the cooling inflation rate to Mr. Trump’s efforts to cut government spending, slash regulations and drill for energy supply.

The monthly reading, which is down from a 0.3% increase in the last monthly report, enthused the White House because it signaled a positive trajectory.

“The near-term trajectory is what’s really important. And if you look at over the last three months and then annualize it, core inflation is only 1.6% now,” White House National Economic Council Director Kevin Hassett said on Fox Business.

“I’m not saying we’re going to declare victory yet on the price problem,” he said, “but this is just an astonishingly good CPI report.”

U.S. stocks surged after the inflation report, with all the major indexes trading in positive territory.

The Bureau of Labor Statistics issued its CPI numbers for the first time since October, when it reported September figures to help the Social Security Administration set cost-of-living adjustments in benefit checks.

Otherwise, the agency delayed reporting on jobs and inflation due to the government shutdown from Oct. 1 to Nov. 12 and is catching up on data releases this month.

Utility costs and used cars were drivers of inflation, and there were large gaps in the data for October and November.

While CPI came in lower than expected for November, “the BLS didn’t collect data for the entire month — so proceed cautiously,” Kathy Jones, chief fixed income strategist at the Charles Schwab Center For Financial Research, said on X.

Economists, consumers and politicians are watching the inflation numbers after Mr. Trump pledged to bring down soaring costs from the Biden years. Inflation climbed as high as 9.1% in June 2022, but had dropped to 2.9% in December 2024, President Biden’s last full month in office.

This year, Mr. Trump issued sweeping tariffs on imports, which have not resulted in widespread inflation but could raise some prices.

Only 32% of Americans think the U.S. economy is good compared to 63% who think it is bad, according to a CBS News/YouGov poll released Thursday.

The share of those rating the economy positively dropped 6 percentage points from January, and three-fourths of Americans said their income is not keeping up with inflation.

Mr. Trump insists 2026, the 250th anniversary of the U.S.’s founding, will be a banner year as his agenda takes hold.

“We’re poised for an economic boom the likes of which the world has never seen before,” the president said in his primetime address Wednesday. “There could be no more fitting milestone than to complete the comeback of America that began just one year ago.”

Democrats were relatively mum about the better-than-expected report but continued to hammer Mr. Trump over affordability. While the rate of inflation may be cooling, it does not mean prices are coming down.

“Despite promising to lower prices on ‘Day One,’ prices are still rising, and experts predict even higher prices next year,” said Jaelin O’Halloran, the deputy rapid response director for the Democratic National Committee. 

Congressional Democrats have pointed to Mr. Trump’s tariffs, or levies on foreign goods brought to the U.S., as a contributor to stubbornly high prices.

“The administration’s attempt to celebrate a single report, which every reputable economist says should be treated cautiously due to incomplete data and still shows elevated inflation, only underscores how out of touch they are,” said Rep. Brendan Boyle, Pennsylvania Democrat and ranking member on the House Budget Committee.

The president tried to ease prices in November by reducing tariffs on coffee, bananas and other products that cannot be grown in sufficient amounts to meet U.S. demand.

Yet Mr. Trump is defending his levies overall, saying they forced drugmakers and other companies to build job-creating factories in the U.S.

Mr. Trump also said tax cuts from Republican legislation and changes at the Federal Reserve will jump-start the economy. Mr. Trump is in the final stages of interviews for a replacement for Fed Chair Jerome Powell, whose term ends in May.

He is hoping the new chair pushes for steeper interest-rate cuts.

The Fed cut rates three times in a row to end the year. December data released in January will determine whether the downward trend in inflation persists and merits another rate cut.

In the meantime, the president is promising cash payments to ease financial pain. He floated a $2,000 payment to low- and middle-income Americans from tariff revenue.

And during his midweek speech, he said more than 1.4 million service members will receive a check for $1,776 — playing off the year America declared independence — this Christmas season.